Spokane County doesn’t expect to reach 2024 sales tax goal until end of 2025

(The Center Square) – Spokane County is entering its budget season, but sales tax revenue still needs to catch up.

The Board of County Commissioners met on Tuesday to discuss the trailing revenue and initial budget proposals before several roundtable discussions in the coming weeks. The final budget adoption isn’t until December, but the elected officials may have to cut upwards of $18 million .

Randy Bischoff, the county’s senior director of Finance & Administration, told the commissioners that sales tax revenue has fallen short for seven of the last 12 months. While the revenue is trending slightly higher than last year, it’s still falling short of projections by $1.1 million, or 2.1%.

The difference seems minute but adds up over time. The county has seen some of the last few months meet its projections, but sales tax revenue still fell short by 4.2% alone in August, according to data presented by Bischoff.

“Back in [August 2022], we were up 10.3% over the prior 12 months, and right now, we’re only at 0.5% over the prior 12 months,” Bischoff said regarding the rolling year-over-year average.

Retail sales tax is the county’s largest source of revenue, amounting to $50.3 million since the start of 2024. However, the county anticipated a 2% growth this year but is currently only at 0.4% for the first eight months.

Bischoff said more revenue is expected to come in, but not to the level that the county anticipated. Instead, he said officials should expect to meet that 2% growth by the end of 2025, meaning 1% for this year and another 1% for the next one.

Most of the county’s sales tax revenue comes from the City of Spokane, at around 47.5%, and Spokane Valley, at roughly 24.2%. Unincorporated Spokane County brings in the third most at 16.9%.

While revenue from Valley and unincorporated areas has remained relatively the same over the past few years, the City of Spokane is trailing around 3% behind what it generated in 2019. The shortfall, combined with increased costs, has amounted to the need to cut millions of dollars.

Jason Metcalf, a management and budget analyst with the county, told the commissioners that consumers are becoming more “credit conscious.” He referenced national data that shows past-due credit balances are at the highest level since 2012.

“The upside risk to this is that as interest rates drop, it should help the capacity for people to spend,” Metcalf said. “As interest rates drop, home sales should increase, and then when people are buying homes, they want to furnish it with some new stuff.”